- 59 -
agreement, as well as for the general objective of having
insurance on its key employees and stockholders. Based on this
concession, the court found there was a bona fide nontax business
purpose and economic objective to be served by the insurance.
See id. The court also found that the transaction produced
benefits other than tax benefits. The court concluded that "The
policies purchased provided for a beneficial interest. The
transaction was not without economic value, economic
significance, economic substance, or commercial substance."
Campbell v. Cen-Tex, Inc., supra at 692 (fn. refs. omitted).
In contrast to Campbell v. Cen-Tex, Inc., supra, we have
found that no nontax purpose was served by the COLI transactions.
The projections for the COLI policies contemplated a substantial
pretax loss in each year, even after considering the projected
death benefits and net cash surrender value of the policies.
Only by deducting the policy loan interest and fees and reducing
its income tax could petitioner anticipate any benefit from its
COLI transactions. Without the tax benefits of the policy loan
interest and fee deductions being generated by the COLI plan,
petitioner's plan would have generated a predictable negative
cash-flow and pretax loss in each of the 60 years projected.
This predictable result precludes any economic value, economic
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